India expresses ‘serious’ concerns in WTO meeting over increase in use of trade protectionist measures

27 Feb 2024 Evaluate

India has expressed ‘serious’ concerns in the World Trade Organization (WTO) meeting in Abu Dhabi over increase in the use of trade protectionist measures by certain countries in the name of environment protection. The remarks assume significance as the country has earlier flagged issues over the European Union’s (EU) decision to impose carbon tax (a kind of import tax) on sectors such as steel and fertiliser; and adoption of deforestation regulation by the 27-nation bloc.

Regarding sustainable development and policy space for industrialisation, Commerce Secretary Sunil Barthwal said developing countries require flexibility in the existing WTO agreements to overcome the constraints faced by them in their industrialisation. He also expressed concerns on the concerted attempt by the developed countries to club long-standing development issues like policy space for industrial development with new issues of ‘Trade and Industrial policy’.

The CBAM (Carbon Border Adjustment Mechanism), or carbon tax, will come into effect from January 1, 2026 for seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products. The CBAM will translate into a 20-35 per cent tax on select imports into the EU starting January 1, 2026. India’s 26.6 per cent of exports of iron ore pellets, iron, steel, and aluminium products go to the EU. These products will be hit by CBAM. India exported these goods worth $7.4 billion in 2023 to the EU. India’s exports of products like coffee, leather hides, and paperboard worth $1.3 billion annually to the European Union are likely to be impacted due to the deforestation regulation adopted by the EU in May 2023.